When starting a business, it’s important to understand and deal with legal, financial, sales and marketing, intellectual property, liability protection, human resources, and a lot of other issues. However, there has never been more enthusiasm for starting a business. Also, there are many examples of small businesses like Uber, Facebook, WhatsApp, Airbnb, and many others that grew into multi-billion dollar companies.
Every new business owner wants to increase their site traffic, quality leads, and sales. Contrary to popular belief, however, not everyone will flock to your newly opened business. Many factors, including the economy and the viability of your solution, will determine whether or not you are able to launch a startup.
Additionally, you will need to develop and fine-tune a business plan, evaluate your financial resources, finish all necessary documentation, select your partners, investigate apps for startups growth, select the most effective tools and systems to launch your marketing and sales, etc., in addition to a great deal more.
You may feel overwhelmed by this procedure, but we will explain each step in detail.
1. Create a business plan
A business plan is a formal document that lays out an organization’s goals and plans. From a marketing, financial, and operational perspective, a business plan lays out a written road map for the company. A business plan is used by both new and established businesses.
A business plan is a crucial document that serves both internal and external stakeholders. For instance, before a company has a track record to back up its claims, it may use a business plan to entice investors. In addition, this can help people get loans from financial institutions.
In addition, a well-thought-out business plan can help keep the company’s top brass on the same page regarding strategic initiatives and on track to achieve their objectives.
Having a business plan is essential for any company, but startups benefit the most. The plan should be revisited and revised on a regular basis to account for progress made or changes in the original objectives. Even well-established companies may need a fresh business plan when they decide to pivot.
Learn More: How to create an amazing Business Plan?
2. Find a name for your company
A company’s name is crucial to its success because it conveys its identity, identifies its products or services, and catches the attention of potential investors. When it comes time to sell your company or franchise it, having a trademark that people are familiar with is invaluable. The business model may be more crucial than the name, but having a catchy name doesn’t hurt.
3. Pick a form of ownership
There may be tax and liability implications associated with the legal structure of your business. Sole proprietorships, partnerships, limited liability companies, and corporations are the most common organizational forms for businesses. If you’re going to start a business, you should pick the best possible one.
4. Register your company
There are many advantages to incorporating a new business. Company registration is a crucial step in the startup process because it serves your company in so many ways, including giving it an edge in the market, ensuring its legal protection, reducing your tax burden, and limiting your liability. As was previously mentioned, forming a corporation is a quick, cheap, and painless process. Nearly all established businesses in the country now have official registration. The registration of a company relieves sole proprietors of many responsibilities.
5. Remember to check the legal requirements
The term “compliance” has a specific meaning in the business world, referring to an organization’s adherence to the rules and regulations set in place to ensure the safety and well-being of its customers and the general public. Getting a business license and paying your taxes are just two examples of basic compliance. As your company expands, the complexity of the issues it faces increases, highlighting the importance of compliance. You will now be accountable for a wider range of employee-related matters, such as recruitment, termination, harassment, safety, compensation, and benefits administration. For example, a restaurant must adhere to health department regulations because of how the food is prepared and served.
In other words, hard work and sacrifice are not enough to create a successful business. To start Apple, even Steve Jobs had to sell his Volkswagen. The value of capital in getting a company off the ground is difficult to overstate. It’s crucially important and must be done. This requirement explains why information about how to acquire business funding is one of the most sought-after subjects online.
There are currently around 900 unicorn companies in the world, and many of them are gearing up to go public in the near future. Many investors are on the lookout for the next Facebook, Spotify, Instagram, etc.
The current trajectory of the funding industry indicates that it is primed to establish global monopolies in a variety of commercial fields. Businesses are beginning to wonder how they will secure funding in light of this upward trend.
Investors will want to know every detail of your business and the investment opportunity before they put money into it. This section needs to show how your business is structured. Include the names of the company’s founders/owners, board members, advisors, and other top executives.
Find a name for your company
However, picking a name for your business that is memorable and conveys what you do is no simple business. It’s crucial to get this right, as a poorly chosen name has been a leading cause of business failure in the past.
Knowing what kind of business structure you intend to have is an important first step in the process of naming your business. Depending on the nature of your business, different regulations may apply to register a name.
If your company is going to operate under a specific name, that name must be registered at the same time the company itself is formed.
Unless your business is named after you or your partner, sole proprietors and partners are required to register their business name with the Australian Securities and Investments Commission (ASIC).
Checking to see if the name you want to use is available is another obvious step in the naming business.
How to choose a name for your business
As was previously mentioned, a name should convey the nature of the services offered, be simple enough to be easily remembered, and ideally be distinct enough to set you apart from the competition. Keep in mind the following helpful hints:
- Provide enough detail without being evasive or overly broad
You should avoid picking a name that is either too generic or too deep. In addition to being forgettable, generic company names like “Melbourne Painting Service” are dull. What’s more, it doesn’t differentiate itself from the competition. The name PhotoBucket fits the bill: it’s memorable, easy to understand, and conveys the essence of the service.
- Make imaginative use of antonyms and synonyms
You shouldn’t try to jam unnecessary keywords into your business’s name. Simple keyword phrases like “General Motors” no longer produce desirable results. Selecting a slightly altered version of related keywords often proves fruitful, provided that it adequately conveys the nature of your business.
Using synonyms of everyday words that are relevant to your service is a great way to come up with catchy, memorable names for your business.
- Keep it easy & Simple
Do not pick a name that is too long or complicated to remember. Keep in mind that the name you choose for your business will have a direct impact on your sales. It ought to be easy on the ears, recognizable, and evocative of good feelings. As an added bonus, it should be simple to say and remember.
Think of the name Zippil; not only is it difficult to say, but it’s also very uncommon. It’s not a good sign when you have to justify your business’s moniker. It’s fine to show off your wit, but don’t go crazy.
- Don’t just do what everyone else is doing
If possible, try to steer clear of names that are too close to those of other companies in your industry. The perception of being derivative can damage a company’s reputation. It may also cause customers to wrongly associate your business with a rival, resulting in fewer repeat purchases.
- Don’t use your own name
Don’t promote yourself with your own name unless you already have a well-known company. Your business’s name doesn’t convey any information to the public about what you do. If you plan on selling your business or expanding in the future, this could potentially create a slew of issues.
On the other hand, there are exceptional cases where including the proprietor’s name in the brand name is a good idea. The examples of Automattic (after its founder Matt) and PageRank are given (named after Google co-founder Larry Page). However, PageRank is not a business name, but rather a ranking algorithm developed by Google.
- Pick a name that can grow with your company
Choose a moniker that can help your business grow. If you currently only sell books, for instance, you could expand into stationary and accessory products. If your service is already popular in a particular region, you could also try expanding to neighboring urban centers. Choose a moniker that is generic enough to accommodate expansion.
- Ensure that your domain is relevant
After settling on a shortlist of potential names, you must check its availability. The name may already be in use by another business, so it’s important to verify this. Do a domain name check to see if the one you want is available before committing to building an online presence, which you should?
- Don’t be so quick to use abbreviations in your writing
Big names like IBM and KFC (Kentucky Fried Chicken) often go by their initials. However, acronyms will only confuse potential customers at the beginning of your business when you are trying to establish your brand. And if your business’s acronym is already in use, it will be even more challenging to get noticed by customers and rank highly in search engines.
The Best Way to Decide on a Form of Ownership
One of the most important legal requirements you’ll have to meet when starting a business is selecting an ownership structure, also known as your business legal structure or business entity.
There are four primary organizational forms used by businesses business.
1. Sole Proprietorship
Having one person or entity responsible for all business operations is called a “sole proprietorship.”
When one person owns and operates a business, the entity is said to be a “sole proprietorship,” and the business does not differentiate between the owner and the business. It is the most straightforward method of managing the business. You can operate a business under your own name if you like, but if you want to give it a more professional sound, you can register a “Doing Business As” (DBA) name with the appropriate authorities.
One who works as a graphic designer on their own, either by themselves or with the help of a legally outsourced business.
- Since there is only one owner in a sole proprietorship, setting it up is simple and cheap.
- The business decisions are ultimately up to the owner.
- As an added bonus, filing taxes is a breeze for a sole proprietorship because it is not treated as a separate entity for tax purposes.
- Raising capital and securing loans or investors can be significantly more challenging in the absence of a legal framework guaranteeing repayment in the event of business failure.
- For all intents and purposes, the owner and the business are the same things under the law, making the owner personally responsible for the business’s debts and obligations.
The Taxing Process: Any debts or obligations incurred by the business are the sole responsibility of the sole proprietor. Both gains and losses are subject to regular taxation via the individual’s tax return. Payroll taxes, or self-employment taxes, are also deducted from your earnings. To obtain a tax form from the IRS, look no further.
Some Questions to Ask Yourself Will you, at least initially, be the only employee?
If you answered yes, this is a fantastic choice.
Is it okay with you if I put all the risk on you for the business?
If that’s the case, then go with this. If not, you may want to form an LLC or corporation to shield your personal assets in the event of business failure.
When two or more people agree to form a business together and work together, they are said to be partners. Each business in a partnership has an equal say in running the business and dividing up the profits and losses.
There are multiple medical facilities housed in the same building.
- Forming a business partnership typically doesn’t require a lot of time or money.
- When more than one person has a vested interest in the company’s success, resources can be pooled to greater effect.
- You can take advantage of more than one person’s knowledge and experience.
- If the business fails, both partners will be held responsible, just like a sole proprietor would be.
- Note that a limited liability partnership (LLP) offers protection against this risk.
- Partners share responsibility for each other’s actions as well as their own (s).
It’s important to have a written agreement outlining the division of responsibilities and profits whenever more than one person is involved in making decisions because disagreements are inevitable.
The Taxing Process: Usually, the Secretary of State’s office is the business to go to officially register a partnership with the state. Taxes related to self-employment must also be filed for each partner.
Checklist of Questions to Ask Yourself
Involving any co-founders, even relatives, in the business’s inception?
If you answered yes, this is a fantastic choice. If one of the partners is a family member, a partnership agreement can help keep everyone honest and on the same page.
Do you agree to take on equal business liability with me?
If that’s the case, then go with this. If not, you may want to form a limited liability partnership (LLP), limited liability company (LLC), or corporation to protect yourself in the event of business failure.
Do you think you have the ability to resolve conflicts and work well with others?
If you’re going into business with a partner, you’ll need to learn how to work together and resolve conflicts. One option is to set up shop as a sole proprietorship if you prefer to work independently.
3. Limited Liability Company (LLC)
Business structures such as limited liability companies (LLCs) are more involved than sole proprietorships and partnerships but simpler than corporations. So-called “pass-through entities” are not taxed at their own level, hence the name.
LLCs are not subject to the ownership restrictions imposed by many other business structures, so their members can be any combination of individuals, corporations, and even other LLCs or foreign entities. Most states also permit “single-member” LLCs — those having only one owner.
A small design firm owned by one president and staffed by multiple designers and other employees.
- The owners of a limited liability business (LLC) are protected from financial responsibility for the debts and legal violations of the company. As a result of its lower risk, the limited liability company (LLC) is a common business structure.
- Since they are not a legal entity separate from their owners, they are less burdened by the red tape that comes with running a corporation.
- The setup costs for an LLC are typically higher than those for a sole proprietorship or a partnership.
- Because of the aforementioned complexity and tax implications, some VC firms are hesitant to make LLC investments.
The Taxing Process: With an LLC, the business’s profits “flow through” to the owners rather than being taxed as a separate entity. Having a single tax rate to worry about is simpler. To obtain a tax form from the IRS, look no further.
Checklist of Questions to Ask Yourself
Do you want to have minimal responsibility for the business’s financial performance?
If that’s the case, forming an LLC is a smart move for shielding your assets and finances. Even if you’re venturing into the business of freelancing on your own, this is the way to go.
Have you considered whether or not you have enough money to cover LLC fees?
While the cost to form an LLC won’t break the bank, it is something to consider when setting financial goals for your business.
4. Business corporation
Since it is treated as a legal person in its own right, a corporation enjoys the same legal protections and is subject to the same legal liabilities as any other person (to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes). This business structure is the most involved and is recommended for larger, well-established businesses with multiple employees.
All the major corporations, including Microsoft, Coca-Cola, Toyota Motor, and others.
- Using them is a breeze when you need startup capital.
- For one’s own possessions, they are the safest option.
- In most cases, the personal assets of the company’s founders, directors, and stockholders are protected from the debts and obligations of the business.
- In comparison to simpler business structures, they tend to incur higher administrative costs.
- Their tax and legal requirements are more intricate.
The Taxing Process: Companies have to pay taxes to the federal government, individual states, and even municipalities. You can form a company as either a “C corporation” or an “S corporation.” Companies with a C-Corporation structure face double taxation. When shareholders of a C corporation get dividends, they have to pay taxes on both the level of the corporation and the level of the individual.
When a corporation pays out dividends to its shareholders, it does not get a tax break. Although shareholders must pay taxes on dividends received from the corporation, they are not personally liable for taxes on the company’s profits.
However, S corporations are subject to a single tax rate. Find IRS tax forms and read up on the distinction between C and S corporations.
Checklist of Questions to Ask Yourself
- Do you have the necessary venture capital to turn your corporation from a startup into a multi-million dollar business?
- A company’s size doesn’t matter at the outset, but it will need resources as it expands. When you have a group of investors willing to put at least $1,000,000 into your corporation, it may be time to incorporate.
- Is there a group within your company that deals with accounting and taxes?
Accounting professionals should be sought out because of the complexity of corporate tax regulations. A corporation could be the best option for you if you already work with others or intend to form a team.
Register your company
Once you have a business plan, a name for your business, and a way to organize it, you can move on to the paperwork and legal stuff, which is even less fun. This includes things like registering with the government and getting a tax code, a business license, and/or a seller’s permit, depending on your business structure and industry.
Here, we explain in more depth how to register your business. In short, to register your business, you’ll need to do the following:
Step 1: Choose the state of domicile
Where do you do business? Choose the state where you want your business to be based.
Step 2: Register your business name
When you sign up as an LLC or a sole proprietorship, your business name is automatically registered. Don’t forget that you can always pick a “Doing Business As” (DBA) name.
The state will decide who is in charge of registration. In Georgia, you register your business with the Department of Revenue. In New York, you register with the Department of State. Make sure you find the right place to register in your state.
Step 3: If you need one, ask for an Employer Identification Number (EIN)
If you’re not running a sole proprietorship or an LLC with only one member, you’ll need to apply for an EIN. If you don’t, the IRS will use your personal SSN to figure out how much tax you owe.
Step 4: Do whatever else the law says you have to do
You might need to get a business license or a seller’s permit, for example.
You’ll find a description of what goes into that last step and links to helpful websites where you can learn more.
Please Note: These steps are only for businesses in the U.S. that need to follow the business.
How to Follow the Law
There are rules for businesses at the federal, state, and sometimes even local level. It’s important to make sure you know what’s needed on all three levels. If you don’t check all of these boxes, your business won’t be a legal entity, so it’s important to do so.
- If you need to, get a seller’s permit
If your business sells physical goods to the public, either as a wholesaler or a retailer, you need to get a seller’s permit in most states. “Tangible property” just means things that can be touched, like clothes, cars, toys, building materials, and so on. In some states, service businesses like accountants, lawyers, and therapists are also required to have a seller’s permit.
With the seller’s permit, you can charge buyers sales tax. Then, you’ll pay that sales tax to the state each quarter by putting the sales tax permit number on the state’s tax payment form.
Your state’s Board of Equalization, Sales Tax Commission, or Franchise Tax Board can help you get a seller’s permit. Find your state on this IRS website to help you find the right office.
Search for “seller’s permit [state name]” to find out how to apply at the office near you.
- If you need to, apply for a federal business license
Almost every business needs some kind of license or permit to run legally, but the requirements can be confusing because they vary. Which licenses or permits does your business need? This mostly depends on what industry you’re in. For example, companies that build things need a license to do so.
Go to this SBA.gov website and choose the state where your business is based to find out if it needs a specific license. It will tell you exactly what kind of license or permit you need in that state.
- Get licenses from the state
Most states have rules about what kind of license you need to run a store, a warehouse, or even a business out of your home. Chase Bank says that these can include:
- Licenses to do business
- Permits to build
- Zoning and permits for land use
- Signage licenses
Remember that these rules will be different in each state. For example, if you have a physical store in Georgia, you’ll need an Occupational Tax Certificate. In New York, however, you’ll need a General Vendor license, even if you don’t have a store.
- Apply for licenses and keep them up to date
Some jobs need a professional license, which is different from the federal business licenses you need to run your business legally. This kind of license, on the other hand, makes sure that you are qualified to offer the services you are advertising.
Some jobs may require a license, such as:
- Hair stylists
- Insurance agents
- Real estate agents
Check with your state to make sure you understand the rules and don’t forget to renew your license every year.
- Learn about the tax needs of a small business
Federal taxes are something that business owners have to pay, and the amount of those taxes depends on what kind of business entity you set up. The only businesses that don’t have to file an annual income tax return are partnerships. A form called an “information return” is filled out by partnerships.
As was already said, a business that is owned and run as an LLC or corporation needs an Employer Identification Number (EIN), which you can apply for on the IRS website here. Even if you work as a sole proprietor using your SSN, you’ll still have to pay self-employment tax.
After you’ve signed up, you need to figure out which taxes you’ll have to pay. The three kinds are:
Tax on Self-Employment (SE Tax)
Self-employment tax is a tax on Social Security and Medicare for business owners and other people who work for themselves. If your net earnings from self-employment were $400 or more, you need to fill out Schedule SE (Form 1040) for SE taxes. (Note: There are special rules and exceptions for fishing crew members, notaries public, and more.)
Tax on Employment
When you have employees, you (as the employer) have to pay employment taxes and file certain forms. Social Security and Medicare taxes, federal income tax withholding, and the federal unemployment (FUTA) tax are all types of employment taxes.
You may also have to pay excise taxes, depending on what you sell, where you do business, and so on. In the U.S., for example, there is a federal excise tax on some trucks, truck tractors, and buses that are used on public roads.
Fundraising: How to get money to start a business?
The way a company looks for money must match what it needs. How and where you look for money depends on your company and what kind of money you need. For example, there is a huge difference between a fast-growing internet company looking for second-round venture funding and a local retail store trying to get money for a second location.
In the next parts of this article, we’ll look at six different ways to invest and borrow money. This should help you figure out which options for funding and investing are good for your business and which ones you should go after first.
1. Venture capital
Venture capital is a business that is often misunderstood. Many new businesses complain that venture capital firms don’t put money into new or risky businesses.
People call venture capitalists “sharks” because they are thought to be greedy in business, or “sheep” because they are thought to all think alike and want the same kinds of deals.
It’s not like that. Venture capitalists are business people whose job it is to invest money that belongs to other people. As professionals, it is their job to cut risks as much as possible. They shouldn’t take on more risk than they have to in order to get the risk/return ratios that their capital sources want.
Who should go to venture capitalists with a pitch?
Venture capital shouldn’t be thought of as a way to fund a startup business unless it’s one of the best ones. They can’t afford to put money into new startups unless there is a rare combination of a good product, a good market, and proven management.
Professionals in venture capital look for businesses that they think could increase in value by a lot in just a few years. They know that most of these high-risk ventures fail, so the winners have to make enough money to pay for all the losers.
Most of the time, they focus on new products and markets where sales are expected to grow by a lot in a short amount of time. They try to only work with management teams that have experience with other successful startups.
If you could be a good investment for venture capital, you probably already know this. You have people on your management team who have been there before. You can make yourself and a room full of smart people believe that your company can grow ten times in three years.
If you have to ask yourself if your new company could be a good chance to get venture capital, it probably isn’t. People in new growth industries, such as multimedia communications, biotechnology, and the far reaches of high-tech products, usually know about venture capital and venture capital opportunities.
2. Angel investment
Angel investments are much more common than venture capital, and startups can usually get them much earlier in their growth as well.
Even though angel investing is similar to venture capital and is often mistaken for it, there are some important differences. First of all, angel investors are groups or individuals who invest their own money. Second, angel investors tend to invest in companies at earlier stages of growth, while venture capital usually waits until after a few years of growth, when startups have more history.
Businesses that get venture capital usually do so after they have grown and become more stable with the help of angel investors. Angel investors, like venture capitalists, usually put their money into high-growth companies in their early stages. Don’t think of them as a source of money for established, stable businesses with low growth.
You should also know that the JOBS Act of 2012 loosened some rules and made it possible for what we now call crowdfunding. This had an effect on angel investing. In the past, U.S. securities and exchange regulations said that angel investments could only be made by “accredited investors,” or people with a certain amount of money. Crowdfunding is the term for when people who don’t have enough money to legally invest in startups do it on their own.
Startups and small businesses that aren’t growing quickly can get money from a wider range of investors if they meet certain conditions. A lot of these things are still not clear, so if you’re not sure, talk to a good lawyer first.
Where should I look for angel investors?
Your next question is probably how to find “angel investors” who might want to put money into your business. Some government agencies, business development centers, business incubators, and other similar groups will be connected to the investment communities in your area. Start by talking to your local Small Business Development Center (SBDC), which is probably part of your community college.
You can also put your business plan on websites that connect you with angel investors. These are the two most trustworthy sites in this area:
- Gust Angel Network
Be careful if someone or a business firm says they can help you find startup funding if you hire them to act as a front or negotiator, do your business plan, pitch presentations, and other similar things. These are waters full of sharks.
I know of some legitimate people who offer business plan consulting, but they are harder to find than the sharks. Real angel investors want to work directly with the people who started the business, not with brokers, finders, or consultants. A few decades ago, finders’ fees were a common way to get money for a new business, but they are no longer used.
3. Commercial lenders
Banks are even less likely to invest in or lend money to new businesses than venture capitalists are. They are, however, the most likely way for small businesses that are already up and running to get money.
Small business owners and people starting new businesses are too quick to blame banks and other financial institutions for not lending money to new businesses. Federal banking laws say that banks shouldn’t invest in businesses and make it very hard for them to do so.
The government stops banks from investing in businesses because society as a whole doesn’t want banks to take savings from depositors and put them into risky business ventures. When (and if) these business ventures fail, bank depositors’ money is at risk. Would you like your bank to put money into new businesses (that aren’t yours, of course)?
Also, banks should not lend money to new businesses for many of the same reasons as above. Federal regulators want banks to keep money safe by making very conservative loans backed by solid collateral. Bank regulators don’t think that new businesses are safe enough because they don’t have enough collateral.
So, why do I say that banks are usually the best place for small businesses to get business? Because people who own small businesses borrow business from banks. When a business has been open for a few years, it has enough assets and stability to be used as collateral. Small businesses often get loans from banks that are backed by their inventory or accounts receivable. Usually, there are formulas that show how much can be loaned based on how much is in stock and how much is owed to the business.
A lot of the business for small businesses comes from bank loans based on the business owner’s personal assets, such as their home. Some people would say that home equity is the best way to get money for a small business.
4. The US Small Business Administration (SBA)
The SBA makes sure that small businesses and even new businesses can get loans. The SBA doesn’t give out loans directly; instead, it backs loans so that commercial banks can give them safely. Most of the time, they are applied for and managed by local banks. When you apply for an SBA loan, you usually work with a local bank.
For startup loans, the SBA usually requires that the new business owner put up at least one-third of the needed capital. Also, the rest of the money must be backed by a business or personal assets that are worth a reasonable amount.
The SBA works with banks that are “certified lenders.” An approved lender can get approval from the SBA in as little as one week. If your own bank isn’t a certified lender, ask your banker to recommend a local bank that is.
5. Alternative lenders
A small business that has been around for a while can get a loan from a bank, but it can also borrow against its accounts receivable from specialists in accounts receivable.
Accounts receivable financing is most often used to help cash flow when working capital is stuck in accounts receivable.
For example, if your business sells to distributors who take 60 days to pay, and the invoices waiting to be paid (but not late) add up to $100,000, your company can probably borrow more than $50,000.
Even though the interest rates and fees may be high, this is often a good business for small businesses to get financing. Most of the time, the lender doesn’t take the risk that the money won’t be paid back. If your customer doesn’t pay you, you still have to pay back the money. Most of the time, these lenders will look at your debtors and decide whether or not to finance some or all of the invoices that are still due.
Another business practice that is related to this is called “factoring.” So-called “factors” buy obligations, so if a customer owes you $100,000, you can sell the paperwork to a factor for a percentage of the total amount. In this case, the factor takes on the risk of not getting paid, so it makes sense that discounts are very high. Talk to your banker to find out more about factoring.
5. Money from friends and family
If I could only tell aspiring business owners one thing, it would be that they should know how much money they need and realize that it is at risk. Know how much you’re betting, and don’t bet money you can’t afford to lose.
I’ll never forget a conversation I had with a man who had spent 15 years trying to make his sailboat-making business work but had only gotten older and deeper in debt. “If there’s one thing I can tell you,” he said, “it’s that you should never borrow money from friends or family.” If you do, you’ll never be able to get out. If your business fails, you need to be able to shut it down and leave. “I couldn’t do that.”
The story shows why the U.S. government’s securities laws make it hard for people who aren’t wealthy or experienced investors to put money into a business. They don’t fully realize how dangerous it is. If your parents, siblings, close friends, cousins, and in-laws invest in your business, they are giving you a huge compliment. In that case, please make sure you know how easy it is to lose this money and make sure they do as well.
You don’t want to rule out starting your company with money from friends and family, but you also shouldn’t ignore some of the problems. Bring your whole self to this relationship.
Maybe your idea and situation are better suited for crowdfunding, which means making a profile and pitching your business idea or product on a site like Kickstarter. This way of getting money has become so popular that there are now dozens of crowdfunding sites, each with its own rules and benefits.
Things to think about before getting a business loan
Money is needed for financing and investing, which is a shame because money can lead to scams and other bad business practices. So here are a few reminders to help you stay away from the traps.
1. Be careful about who gives you money.
Don’t think that private placement, angel investors, friends, and family are good ways to get money to invest just because they are talked about here or taken seriously in another source. Some investors are good places to get money, while others aren’t. You should be very careful with these less well-known investment options.
2. Write it down.
Don’t spend someone else’s money without doing the right legal work first. Make sure the papers are signed and done by professionals.
3. Don’t spend money before you get it.
Never spend money that you were told you would get but didn’t. Companies often agree to investments and sign contracts for costs, but the investments don’t go through.
4. Don’t go to friends and family right away when you’re having trouble.
Know that it’s not always a good idea to ask friends and family for money. When your business is in trouble, not having the help of friends and family is the worst thing that could happen. At the same time, you risk losing friends, family, and your business.
How to Make Your Small Business Do Best in 2023 (Pro Tips)
For your small business to be successful, you need to use the right strategies and ideas at the right time and in the right way. And if you want to start a small business that will be successful, you should try to learn from the mistakes other business owners have made.
Not only that, but you will also need to try out new ideas quickly and learn from what works and what doesn’t. And this is important if you want your small business to stay afloat in a sea of competitors.
So, here are some of the best tips and strategies you can use to make your small business a huge company.
- Assess your risk-taking capacity
First, assess your motivation, the amount of capital you’re willing to risk, and what you can do to grow your business. We all want to make money quickly when starting a new business. Will you go the extra mile to succeed?
How many hours can you give up daily or weekly? Will you leave your comfort zone to work? Will your family challenge your new business sacrifices?
When starting a small business, you must answer these questions. After that, you can align your business objectives and strategies with your professional and family life.
- Pick the Right Business & Know Your Customer
The right business choice can sustain and grow your small business. Success depends on choosing a market-demanding business niche. Choosing the right business is key to a successful small business.
After choosing a business, you must study your target customers. Many established companies think they know their target customers, but they don’t. It’s smart to study your target customers and learn more about them.
Companies may conduct surveys to better understand them. This gives the small business valuable feedback on what customers like and how to improve service. Successful businesses listen to customers.
- Product research
A common mistake a new business makes is launching a product without analyzing market demand. They think people will buy anything if they like the idea.
Some companies announce products or services because they know people who want them. This is a bad way to introduce a small business product or service.
To reduce loss, don’t guess that your product will be popular. Examine the product/services market and competitors.
Ask as many potential customers about market fit. Knowing that your target customers want to buy your product gives you a clear idea of its market potential.
- Small-scale beginnings
Every business takes risks. Many believe new business owners always take risks. A smart business never walks blindfolded, though. They establish their small business one step at a time. They take controlled limited risks. They believe in testing a strategy on a smaller scale first, and then implementing or ignoring what works. Always test strategies and ideas on a small scale so that project losses are minimal.
- Prioritize customer service
How often do small businesses lose customers due to bad service? 52% of customers left a company due to poor customer service, according to a recent survey.
One bad customer service review requires several positive ones to make up for it. Today, small businesses can’t survive without good customer service.
No matter what type of business you run, you must always prioritize customer service. Loyal customers are easier to sell to, so you must provide them with excellent customer service to increase their lifetime value.
Assessing your service standard regularly can improve your customer service. Update your data and technology and train your support staff. This could increase costs. Long-term, this will keep you ahead of competitors.
Keep the practice to speed up customer messages. Quickly answer customer questions via social media, phone, or email. This boosts customer satisfaction and business growth.
- Competitor research
Your small business’s main goal should be to differentiate itself from competitors. To succeed, study your competition from the ground up.
Any business will benefit from investing time and resources into competitor strategies before considering company goals and website design.
Whatever type of business you run, you will always have competitors. To be successful, you must always research your direct and indirect competitors. Learn as much as possible about their marketing and sales strategy.
Continue researching competitors. If you don’t have many competitors, your market may not be in demand.
While studying competitors, your primary goal should be to be different from them and create a reputation that convinces products to buy from your brand instead of your competitors.
- Positive Word of Mouth
Positive word of mouth from loyal customers can take your business far, whether you have a large platform/community or only an online market. It boosts the brand/product without much marketing or promotion.
When you’re starting out, word-of-mouth helps your business grow without much stress.
Once a customer sees a new product, most go online to read reviews or feedback on it. Many people base their buying decisions on online customer reviews.
Before shopping, they consult with friends. If word-of-mouth and reviews are bad, you may lose many potential customers quickly.
To help your small business succeed, you must build a solid reputation for your brand and product. Professional service is one way to create a good impression of your brand/product and boost word-of-mouth.
Listen and be humble. Always provide excellent customer service. Explain your product and services to potential customers.
Build your brand’s local reputation. Then they’ll tell others about your brand or product. Participating in, supporting, and sponsoring brand-related seminars, charities, and campaigns can also boost your visibility.
- Effectively market
Your brand needs effective, positive marketing to boost sales. Small business promotion here won’t break the bank. You can build and market your products and services using budget-friendly tactics.
As part of growing and expanding the marketing effort, you can send customized incentives by creating coupons or discount vouchers with the invoice or sending them tailored emails with exclusive promotional offers. This will impress your client.
You can promote your brand and services in other inexpensive ways. You could sponsor newspaper promotions, email marketing, and free training sessions.
Develop business partnerships to cross-promote complementary businesses. Offer free product guides and tutorials. These marketing efforts are cheap and won’t break the bank.
- Reduce business expenses
Many businesses have failed due to poor budgets and financial management. Every company must ensure its budget and spending are under control.
Business costs rise daily. Every small business must control unnecessary costs. Time-consuming and tiring, but you’ll save money.
Starting a small business requires it. Spend your fund early to get your business going. But spend wisely. This helps you avoid too much debt early in your business.
You must also persuade investors to fund your business idea. Before launching your business, you must do this. Review your major expenses regularly to save money.
Wherever possible, cut operation and management costs. Save money by using concessions or discounts from other businesses. Reduce business costs as a habit and company culture.
- Professionalize your website
No small business today lacks a website. If it’s an online business, make the website user-friendly and professional.
Many believe they can’t create and maintain a website. Creating a website is an easy and inexpensive way to promote a brand. When you have a solid, responsive website, your business’s growth chances increase.
E-Commerce Wiki surveys show that most online customers research products and services before buying.
When you have a detailed and profitable website that highlights products and services, your small business can get noticed online. People researching online will learn who you are, what business models you follow, and what services & features you offer.
To make your online presence felt and showcase all your products or services, you need a professional, well-designed, mobile-responsive website with a unique brand name and logo, a detailed summary of the products and services you offer, contact information, and Google maps of your office address. Your company’s goal, future plan, and customer testimonials.
Social media can help you stand out besides your website. You can promote your business on Facebook, Twitter, YouTube, Instagram, LinkedIn, etc., depending on your target market.
- Learning & Networking
Learning from others’ mistakes can help you succeed. Your small business is the same. Join like-minded groups to learn from business influencers. Continue networking to build a relationship.
Networking with other business personalities can be helpful for exchanging ideas, discussing/resolving common issues, and taking valuable suggestions from more experienced people.
You never know when your next market opportunity will arise. Networking can help you build your business.
An experienced entrepreneur handles business crises effectively. They know what to do next to improve their business and services. You need their advice as a new or small business owner.
Explore your niche market and industry. Attend business-related seminars and courses. Take market-expert courses. Learning from experts will reduce errors and trial-and-error time.
- Change and improvise
You may have written a business plan before launching your product. Not necessarily after a few years. Whatever works today may not in a few years. Small business launch planning takes years.
Startups often have outdated ideas and plans when they’re ready to launch their dream project. So keep your ideas current.
Plan constantly and improvise. Try new, innovative ideas. You can always revise old business plans.
Successful companies review outdated strategies annually. Based on the review, they set new, better goals.
Listen and watch for new inventions. Check whether your products or services can be promoted better.
Methods for Creating a Successful Online Business in 7 Easy Steps
Step 1: Start a need-filled business
Most beginners look for a product first, then a market.
Start with a market to boost your success. Find a group of people who are looking for a solution but not finding much. Online market research is easy.
- Visit online forums to see people’s questions and problems.
- Do keyword research to find popular, low-competition keywords.
- Visit your competitor’s websites to see how they’re meeting demand. Then you can create a product for an existing market and beat the competition.
Step 2: Write sales copy
There’s a proven sales copy formula that guides visitors from arrival to purchase:
- Make a catchy headline.
- Describe the problem your product solves.
- Establish your credibility as a solver of this problem.
- Add testimonials from people who have used your product.
- Talk about the product and how it benefits the user.
- Make an offer.
- Make a strong guarantee.
- Create urgency.
- Ask for the sale.
Your copy should emphasize how your product or service solves problems or improves lives. What’s in it for me?
Step 3: Build your website.
You’re ready for small-business web design once you know your market, product, and selling process. Simplify. You have five seconds to grab someone’s attention; otherwise, they’re gone. Some tips:
- Choose plain fonts on white.
- Every page should have clear, simple navigation.
- Graphics, audio, and video should enhance your message.
- Include an opt-in offer to collect e-mails.
- Two clicks between buyer and checkout are ideal.
- Make your website customer-friendly.
Step 4: Use search engines to attract buyers
PPC is the easiest way to promote a new website. Two advantages over organic traffic. PPC ads appear immediately and allow you to test keywords, headlines, prices, and selling approaches. You can also use PPC ads to find your best, highest-converting keywords. Then, distribute the keywords in your copy and code to boost your organic search rankings.
Step 5: Become an expert
People find information online. Provide free information to other sites to boost traffic and SEO. Each piece of information should include a link to your site.
- Expert content, free. Create useful articles, videos, etc. Distribute the content via article directories or social media.
- Include “share” links on your website’s valuable content.
- Be an active expert in industry forums and social networking sites where your target market congregates.
Step 6: Boost sales with email marketing
Building an opt-in list is one of your online business’s most valuable assets. Your customers and subscribers have approved the email. So,
- You’re fulfilling a request.
- You’re making lifelong friends.
- 100% measurable.
- Email marketing is more cost-effective and targeted than print, TV, or radio.
Visitors who opt into your list are hot leads. Email is best for following up on leads.
Step 7: Boost sales with back-end and upselling
Lifetime value is a key internet marketing strategy. If you follow up with customers, 36% will buy from you again. First sales are difficult and expensive. Back-end and upselling can encourage repeat purchases.
- Offer complementary products.
- Send electronic coupons they can use next time.
- On the “Thank You” page, suggest related products.
Rewarding loyal customers will increase their loyalty.
Get Ready to Launch Your Business
It’s not easy to run a small business, but if you have a good plan, you can set your business up for success. Before you start your business, make sure you know what you need to do, have a good business plan, and turn in your legal paperwork. Once you have a good plan for your business and the money to make it happen, you’ll be well on your way to starting a successful business.